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Waht you need to know about financing...

This is a discussion on Waht you need to know about financing... within the Motorcycle Financing forums, part of the General category; Lot of questions here. I sold bikes for quite a few years; including dealing with the financing issues…here are some ...


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Old 12-16-2008   #1
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Default Waht you need to know about financing...

Lot of questions here. I sold bikes for quite a few years; including dealing with the financing issues…here are some quick points…

Q: Can I get a loan on a bike?

A: It all comes down to your credit worthiness. These days a handy number called a FICO score generated by credit reporting agencies will pretty much determine if you can finance a bike at all, and if so how good a deal you will get.

Fico Scores –

740 to 830 is tops. Best rates, you will be able to get financing at a very attractive rate.
700 to 739 is very good to excellent credit.
680 to 699 is Good. You will be able to get financing but usually at a higher interest rate.
620 to 679 is okay. You may be declined for a high buck motorcycle loan if you are at the bottom of this range.
580 to 619 is a poor credit score. If you can get financing for a bike it’s going to be expen$ive.
500 to 580 is genuinely a poor credit score. It’s not likely you’ll get a loan for a bike, and if you do it’s gunna cost ‘ya dearly. They are going to want a lot down and the amount loaned will be small. The terms will be brutal.
Below 500? Good luck.

Before you go shopping for a bike check your credit score; there are many online services that can do this for you; if you go directly to a credit reporting agency you can get a copy of your credit report for free. Just Google it.
The score is generated when you request it from a credit reporting agency so the number changes on a number of factors on a daily basis.
The best financing comes from a factory sponsored program – such as BMW, Harley-Davidson and Honda have. Its good old fashioned classic style financing. Not everyone will qualify. Yamaha and Kawasaki seem to get in bed with a credit card company – and literally charge the purchase price of the bike on a credit card with a low introductory rate which expires after a certain time – then it gets expensive! Although the minimum monthly payments are very low for the first year – if all you make are the minimum payments the balance actually goes up during this period and when the introductory rate expires hello 20%+ interest rate!

Q: If I finance the bike will I need to get full coverage insurance?

A: Yes. The finance company is holding the motorcycle as collateral; it’s their motorcycle until it’s paid in full and they release the title to you. In the meantime it’s their bike and they want it covered. One of the clauses in the contract is that you will keep the bike covered during the term of the loan. The insurance carrier is in contact with the finance company (the “loss payee”) during the term of the loan and if you should cancel the insurance policy of let it lapse the finance company will insure it for you – at a very high price – which you will be responsible for! It’s in the contract. If you obtain financing in the form of a personal loan the bike may not be held as collateral and then full coverage would not be required.

Q: What is “Gap Insurance”?

A: This is an insurance policy that covers the difference between the loan balance and the actual cash value of the motorcycle during the first few years of the loan. Sad but true, as soon as you take the bike from the dealer its worth less than the balance on the loan. If you were to crash and total the bike in the first week of ownership the insurance would only cover the actual cash value of the motorcycle which would be less than the loan balance. In short you wouldn’t have the bike and you would be obligated to pay the difference.

Q: I am still making payments on the motorcycle and do not have the title but I want to sell it? How do I do this?

A: Before the motorcycle can be transferred to the new owner the terms of the loan must be satisfied – in short it must be paid off. If the value of the bike is higher than the payoff amount of the loan this can be accomplished. The final part of the sale will occur at the finance company office – this is where the buyer will provide a check to the finance company to pay the loan in full. The finance company will then release the motorcycle to the buyer. If the payoff amount is less than the agreed price then the buyer will give you a check for the difference. If the loan amount is more YOU will be making up the difference to the finance company.

If you have any more question ask here and I’ll respond.
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Old 09-25-2012   #2
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Great information you have added in this post, i can't find anywhere such kind of information, i have come across your post and see that you have added here nice information about financing so couldn't go without say thanks, I want to say thanks for sharing this post.

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